PayPal Is No Friend To NCAA Pools, Restricts Accounts Used To Bet On March Madness

The fact that gambling is illegal does little to stop NCAA basketball fans from betting online or engaging in office pools. But PayPal is doing what it can to block users from getting in on the action. The service is restricting accounts it believes have been used for gambling.

After a recent review of your account activity, it has been determined that you are in violation of PayPal’s Acceptable Use Policy regarding your sales / offers of March Madness sports pool.

As Bloomberg notes, PayPal’s user agreement forbids members from using their accounts for sending or receiving money for contests with entry fees and prizes. It seems as though office pool maestros who hoped to use PayPal this year will have to resort to the old-fashioned money jar.

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I’m no fan of office pools, and generally think college basketball is stupid BUT–those office pools are generally legal. I looked up the statutes a few years ago when our corporate email was (as it is every year) full of junk from these pool people. Annoying, yes. Illegal gambling, no.

Fubish says: I don't know anything about it, but it seems to me...says:

I am too lazy to look up the specifics, but I have a feeling that this has to do with the reporting threshold (like $600 for a W-2), which is not the same as what is taxable, even though people often get away with treating them as such.

Correct. Any income is supposed to be reported unless specifically excluded by law. Just because you do not receive a 1099 doesn’t mean that you don’t have to claim it. Worst case scenario is they sent it to a wrong address or it was lost in the mail. The gov’t would have a record of it and you didn’t report it. Could be problems for you.

As just an example, Colorado law allows for office pools so long as 100% of all inputted funds is released as winnings. Meaning, no one can take a rake or finder’s fee or whatever. All money must be available to be won.

But why even use PayPal? Don’t they charge you a fee for the money transfers? Seems a waste of time, especially since they have a tendency to hold your money without cause for an unspecified about of time.

Only if you bring in a certain amount (I forget what that threshold is). There is some magic number that is the maximum for a free account and anything above that becomes a business/premier account with some added fees.

Problem is the laws for this are different state to state and PayPal operates internationally as well as in all states, so they made their rule the safe thing to ensure they are not going to end up in the middle of some legal problem.

Also based on most state laws, holding back any of the money for the “house” takes this from being legal to illegal activity, and since PayPal does charge fees on the money it transfers they could somehow end up in trouble if people moving office pool money around and they are collecting their fees. This is more likely laws lagging behind technology, but you cannot blame PayPal for protecting themselves from the one entity that is even stupider and more evil than they are… government.

It’s safer than you think. I log in to my bank account and choose to transfer, say, $500 dollars to a friend by providing their email address. They get an email notifying them of this, but to actually claim the money they need a secret password I chose. I would call them to give it to them (never email it), which they then enter, log into their own bank, and the money’s there.

When, oh when will PayPal finally be regulated as a bank? Everything they do says, “We wanna be your bank”. I wonder what would happen if FDIC, Federal Reserve or other auditors forced open PayPal’s books. I wonder what they would find.

Right, but an office pool is intrastate. Once you start doing it online and potentially across state borders, you run up against federal law, which is not favorable on online gambling in general, and sports-related betting in particular.

That’s why when I have people send me money; in the Subject they type Mall Madness. Not only does it fool PayPal’s filter but who doesn’t love gambling on the outcome of a children’s game that involves fake credit cards and buying fake clothing?

Legally, it is, though. That’s like saying you aren’t liable for accepting stolen goods. It all falls under the very broad, very old principle of not allowing illegal activity to occur on your property. We’ve had that in the US since our founding, and inherited it from English law.

Oh wait, this just shows how stupid this comment is. Like any “Bank” or more specifically “Bank like entity” PayPal is required by the government to make sure that they look for and do whatever they can to prevent / report illegal activity. While I would agree that PayPal takes this to unreasonable extremes in many cases, Stating they should not be doing anything is an unreasonable extreme in the opposite direction